Will a Reduced Chargeback Threshold Lead to More Merchants in Visa Risk Monitoring?

Will a Reduced Chargeback Threshold Lead to More Merchants in Visa Risk Monitoring?

April 18, 2019

Several sources are reporting that Visa plans to tighten its Risk Monitoring Programs for merchants, effective October 1, 2019.

Visa has not yet confirmed the move, but, according to Digital Transactions, the current one percent threshold for chargebacks will be reduced to .09 percent, and merchants that exceed the new limit will be placed in Visa’s Risk Monitoring Program.

“Tighter thresholds mean that even more merchants may be subject to being entered into one of Visa’s Risk Monitoring programs, which come with the potential for increased fines and other costs. It’s more important than ever to have risk mitigation and customer communication strategies in place that help to reduce fraud and disputes,” Verifi, a Los Angeles-based provider of risk management technology for online business, said in a blog post.

Though tightening the threshold is one way to possibly reduce chargebacks, there are other options available for merchants, particularly those who process card-not-present payments.

Two of those options include relying on third-party solutions to more accurately predict chargebacks due to hostile fraud and root cause analytics, according to Karisse Hendrick, e-commerce chargebacks and fraud consultant. “I firmly believe that most chargebacks can be prevented by understanding the patterns of behavior that cause chargebacks. From fraud to customer service to policies to internal processes.”

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Operational Impacts of New Chargeback Rules

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